ONE Gas, Inc.OGS
ONE Gas, Inc. Income Taxes Disclosure
INCOME TAXES
The following table sets forth our provision for income taxes for the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
(Thousands of dollars) | |||||||||||||||||
| Current income tax provision (benefit) | |||||||||||||||||
| Federal | $ | 8,484 | $ | (68,660) | $ | 16,551 | |||||||||||
| State | (756) | (1,476) | (829) | ||||||||||||||
| Total current income tax provision (benefit) | 7,728 | (70,136) | 15,722 | ||||||||||||||
| Deferred income tax provision (benefit) | |||||||||||||||||
| Federal | 46,808 | 110,717 | 21,905 | ||||||||||||||
| State | 2,699 | (4,195) | 2,868 | ||||||||||||||
| Total deferred income tax provision (benefit) | 49,507 | 106,522 | 24,773 | ||||||||||||||
| Total provision for income taxes | $ | 57,235 | $ | 36,386 | $ | 40,495 | |||||||||||
The following table is a reconciliation of our income tax provision for the periods indicated:
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
(Thousands of dollars, except percentages) | ||||||||||||||||||||||||||
| Income before income taxes | $ | 321,459 | $ | 259,236 | $ | 271,727 | ||||||||||||||||||||
| Federal statutory income tax rate | 21.00 | % | 21.00 | % | 21.00 | % | ||||||||||||||||||||
| Provision for federal income taxes | 67,506 | 21.00% | 54,439 | 21.00% | 57,063 | 21.00% | ||||||||||||||||||||
| State income taxes, net of federal tax benefit | 6,155 | 1.91% | 4,333 | 1.67% | 3,834 | 1.41% | ||||||||||||||||||||
| Tax effect of permanent differences | 2,302 | 0.72% | 2,018 | 0.78% | 1,860 | 0.68% | ||||||||||||||||||||
| Tax effect of state income tax deduction | (393) | (0.12)% | (209) | (0.08)% | (443) | (0.16)% | ||||||||||||||||||||
| Amortization of excess deferred federal income taxes | (13,382) | (4.16)% | (15,680) | (6.05)% | (20,565) | (7.57)% | ||||||||||||||||||||
| Amortization of excess deferred state income taxes | (4,211) | (1.31)% | (10,004) | (3.86)% | (1,795) | (0.66)% | ||||||||||||||||||||
| Tax (expense) benefit for employee share-based compensation | (116) | (0.04)% | 1,063 | 0.41% | 418 | 0.15% | ||||||||||||||||||||
| Other, net | (626) | (0.19)% | 426 | 0.16% | 123 | 0.05% | ||||||||||||||||||||
| Total provision for income taxes and effective income tax rate | $ | 57,235 | 17.81% | $ | 36,386 | 14.03% | $ | 40,495 | 14.90% | |||||||||||||||||
As of December 31, 2025, we have no uncertain tax positions. Oklahoma continued to represent more than 50 percent of state income taxes, net of federal tax benefits and effect of state income taxes. Changes in tax laws or tax rates are recognized in the financial reporting period that includes the enactment date. On July 4, 2025, the One Big Beautiful Bill Act was signed into law, introducing several corporate tax changes. After evaluating the legislation, we do not expect it to have a material impact on our income taxes. We will continue to monitor developments and assess future implications as additional guidance becomes available.
Following Revenue Procedure 2024-15, we amended our 2022 federal tax return to request a refund of $55.6 million, which remains pending approval by the Joint Committee of Taxation. Additionally, we filed an amended Oklahoma corporate income tax return in the first quarter of 2025 and received a $1.5 million refund in October 2025.
Income tax expense reflects credits for the amortization of the regulatory liability associated with EDIT, embedded in base rates, of $17.6 million and $25.7 million for the years ending December 31, 2025, and 2024, respectively.
The following table sets forth the tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities for the periods indicated:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
(Thousands of dollars) | |||||||||||
| Deferred tax assets | |||||||||||
| Regulatory adjustments for enacted tax rate changes | $ | 95,721 | $ | 100,718 | |||||||
| Net operating loss | 362,558 | 405,316 | |||||||||
| Lease obligation basis | 2,773 | 3,669 | |||||||||
| Purchased-gas cost adjustment | 10,900 | — | |||||||||
| Other | 3,359 | — | |||||||||
| Total deferred tax assets | 475,311 | 509,703 | |||||||||
| Deferred tax liabilities | |||||||||||
| Excess of tax over book depreciation | 996,128 | 930,680 | |||||||||
| Winter weather event costs | 363,988 | 381,818 | |||||||||
| Purchased-gas cost adjustment | — | 8,654 | |||||||||
| Other regulatory assets and liabilities, net | 69,962 | 73,904 | |||||||||
| Employee benefits and other accrued liabilities | 6,165 | 934 | |||||||||
| Right-of-use asset basis | 2,942 | 3,866 | |||||||||
| Other | — | 1,585 | |||||||||
| Total deferred tax liabilities | 1,439,185 | 1,401,441 | |||||||||
| Net deferred tax liabilities | $ | 963,874 | $ | 891,738 | |||||||
At December 31, 2025, we had $338.4 million (tax effected) of federal net operating loss carryforwards and $24.1 million (tax effected) of state net operating loss carryforwards available to offset future taxable income.
We have filed our consolidated federal and state income tax returns for years 2022, 2023, and 2024. We are no longer subject to income tax examination for years prior to 2022.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 18, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.